Thank you for your letter of May 4th. It provides a valuable and constructive “jump-start” to enhancing the market coordination between PJM and MISO by highlighting our areas of agreement and suggesting a path forward. As the administrators of our respective markets, MISO and PJM are well situated to identify and develop solutions to enhance seams coordination, including capacity deliverability, interchange optimization, outage scheduling, congestion management processes and transmission planning. Efforts are already underway to address most of these, either at the staff or stakeholder level. All of these efforts would benefit by great transparency and stakeholder involvement.
As I read your letter I see several areas of agreement. One is that there are a number of cross-border and market coordination issues between our two organizations that should receive immediate attention and resolution. Another is that these issues can and should be resolved in the context of the Joint Operating Agreement (JOA). The JOA is a product of the Joint and Common Market (JCM) process and that process can be used to address these important issues. The JCM process was open, transparent and leveraged the expertise of both organizations to jointly and quickly develop solutions to identified problems. In fact, that process was used to develop and implement a highly effective and efficient market-based seams congestion management process that is still the model for the industry.
Your suggestion to utilize that process is consistent with FERC’s directive to continue efforts under the JCM initiative to seek and implement seams efficiency enhancements. In addition, the JCM process involved all interested stakeholders, including market participants and other important constituencies, such as State Regulatory Commissions and Consumer Advocates. Finally, the JCM process is mature and can be kicked off immediately to meet our mutual goal of quickly addressing our already identified seams coordination enhancement opportunities.
We certainly agree that there is a difference of opinion on the results of consultant studies on the magnitude of consumer benefits of capacity deliverability. In terms of a process for trying to resolve these differences, your May 4th letter makes clear that PJM considers capacity deliverability a “longer-term” item and a “proposal” rather than a high priority issue demanding prompt resolution. That position is consistent with comments made by PJM and PJM stakeholders in FERC filings, PJM stakeholder meetings and in other forums. MISO respectfully disagrees with that position and believes that the magnitude of potential consumer savings makes it essential to quickly address capacity deliverability. We also believe that it is important to work on this issue in a forum that is open and transparent so as to afford regulators and stakeholders in our respective RTOs the opportunity to, at a minimum, observe the process. A FERC technical conference provides the best forum to comprehensively evaluate artificial barriers to efficient cross border capacity deliverability as well as to identify positive near-term steps that can be taken to remove such barriers and thereby maximize consumer savings. Accordingly, we agree with and support the requests by many Midwest State Regulatory Commissions, Consumer Advocates and other stakeholders for a technical conference, overseen by FERC, to evaluate this important issue.
Based on our areas of agreement and given the importance and urgency of improving seams coordination, enclosed is a results-oriented process that builds upon your initial proposal and is based on the process effectively employed to develop the JOA. As noted above, MISO and PJM can begin work on seams enhancements immediately and MISO stands ready to do so. I hope when we meet on May 14th we can finalize a process so you can join me in submitting it as a JCM status report to the Federal Energy Regulatory Commission.
Once again, thank you very much for your very helpful letter. I look forward to working with you to enhance the market coordination between our two organizations; enhancements that will benefit the electricity providers and consumers in our footprints.
Vice President Operations
Proposed Process for MISO and PJM to Enhance Seams Coordination under the MISO and PJM Joint Operating Agreement
Scope – Develop list of enhancement opportunities. Opportunities already identified by PJM and MISO include:
Capacity deliverability – to be determined as an outcome of a FERC Technical Conference.
Interchange optimization – already under development between MISO and PJM. FERC recently approved such a process between NYISO and NE ISO.
Outage Coordination – evaluate opportunities to improve and better align processes and models, e.g., by performance of joint impact studies.
Congestion management – continue to pursue previously identified enhancements to existing Market-to-Market protocols; evaluate additional enhancement opportunities.
Transmission Planning – underway as part of Order 1000 compliance effort.
May – June: Development of Problem Statements
MISO and PJM develop problem statements for the above identified opportunities. As noted earlier, in our role as market administrators, MISO and PJM have the technical expertise and are best positioned to efficiently and effectively perform this task. Inclusion of external experts should be considered for this initial step. Problem statements will be shared through joint stakeholder meetings to solicit stakeholder input on identified enhancement opportunities and to identify additional enhancement opportunities.
July – September: Issue Prioritization and Resolution
MISO and PJM technical experts develop solutions to specific problems identified for each enhancement opportunity based on previously developed problem statements. Stakeholder meetings will be held to solicit stakeholder input on details of solutions jointly developed by MISO and PJM.
October – November: Preparation and Filing of JOA Modifications
Tariff language modifying current JOA prepared and filed at FERC. MISO and PJM initiate development of processes and procedures necessary to implement new JOA provisions. Stakeholder meetings will be held to review draft tariff language and to solicit feedback and suggested modifications to proposed tariff language.
December – January: JOA Enhancement Implementation
MISO and PJM will make necessary systems and process modifications and will implement new JOA provisions upon acceptance from FERC.